KPMG audit role is under threat at Standard Chartered

Standard Chartered looks set to dump KPMG as auditor after four decades of its checking the bank’s books, as the seemingly cosy relationship between big business and its accountants is smashed in the wake of the financial crisis.

The Evening Standard can reveal that the bank is putting the audit role out to competition in a move that will be seen as a victory for Pirc, the shareholder governance lobbying group.

Last year Pirc called for KPMG to be sacked after alleging that the accountant had allowed Standard Chartered to overstate the strength of its 2011 accounts by $3.6 billion (£2.3 billion). KPMG, led in the UK by senior partner Simon Collins, earned $18.7 million from Standard Chartered last year.

The news also comes two months after the New York-based advisory arm of Deloitte was fined $10 million for its role in Standard Chartered’s breach of US sanctions against Iran.

The Big Four accountants — PricewaterhouseCoopers and EY being the other two — have been widely criticised for failing to spot the warning signs of the global financial meltdown that started in 2007.

Critics believe the Big Four’s long-standing relationships with the banks prevented them from being objective. Fears over these relationships have sparked regulatory reviews into audit at domestic and European Union level. The Competition Commission is demanding that it becomes mandatory for FTSE firms to re-tender their audit work every five years.

Standard Chartered has sent out what is known as a “request for proposal”, which essentially kick-starts the bidding process. KPMG will be allowed to repitch but will be nervous at the prospect of losing the work so soon after it was ousted by PwC as auditor to HSBC.

A spokeswoman for Standard Chartered confirmed that the bank is “in the process” of putting the audit role out to tender. KPMG declined to comment.